Top of the National Agendaas the Stock Market slides to 2008 levels - Equity market traders cheer; Bond market traders cry in their beerEric LaMont Gregorywe are going broke to pay back money to an institution of our own creation that we owe only to ourselves,with the full faith and credit of the United States at stake, deficit brinksmanship is a frontal assault on the American people

There are clearly two issues of immediate and pressing importance at the top of the national agenda - jobs and spending. And, they are related in a way, that is let us say, counter intuitive. If one listens to the current debate about the deficit, realising that much more attention is being paid to the deficit than to putting nealy 14 million Americans back to work, one could reasonably reach the conclusion that the solution to the one problem, the deficit, was the solution to the other problem, jobs. Such that, if we solve the deficit crisis, the job crisis goes away at the same time.In a word, no. Solving the deficit and spending crisis, does not put 14 million Americans back to work. If the current deficit reducing plans put forth on either side of the aisle are implemented, unemployment will not only not go down; it will increase. Reductions in the size of any organisation; is a reduction in the number of people working for that organisation. Putting people out of work also increases outlays for such things as housing benefit, health care, and food assistance, and these expenditiures add to the debt. There is a limit to how many taxpayers you can put out of work, before government expenditures exceed tax revenue. More about this later, but it should be understood that deficit and spending cuts are corrections of past overspending and an attempt to reduce future spending obligations. Jobs, the kind and number of jobs we need to create, will be created not in the halls of Congress but in every town, village, city and on every farm, large and small, across the great expanse of land that is the United States of America.Now, there are things that the Congress can do to create jobs. On the one hand they have the power to re-think a host of job destroying legislation and the regulatory rules that they spawn that are chocking our heralded free enterprise system. There is much talk about cutting the size of the IRS, but more jobs in this country have been lost by EPA and OSHA meddlings in the work place than in our tax courts. The other thing is to manage the economy in a way that promotes both our export and home-based manufacturing, mining, agricutural as well as our clean hands service sectors.But alas, the Congress has sub-contracted the managemant of our economy to a private corporation, whose strategies and interests are more far-reaching than the extent and scope of the powers of the Congress of the United States.It is time for Congress to accept its Constitutional responsibilities in regards to the economy, and start weaning itself off the Federal Reserve.It is not that the framers of our system of government, did not know that the management of our economy could become as entangled with foreign interests as it is now. In fact, Jefferson warned of just such as we are confronted with today. I offer a conversation between Jefferson and Hamilton from the miniseries.Alexander Hamilton: The future prosperity of this nation rests chiefly in trade. Trade depends, among other things, on the willingness of other nations to lend us money.Thomas Jefferson: And how would you propose to establish international credit?Alexander Hamilton: Our first step would be to incur a national debt. The greater the debt, the greater the credit. And to that end I have recommended to the president that Congress adopt all the debts incurred by the individual states during the war through a national bank. The idea being that if the states owe Congress money, then other nations will feel more inclined to lend it to us.Thomas Jefferson: If the states are indebted to a central authority, it increases the power of the central government.Alexander Hamilton: There you have it exactly. The greater the government's responsibility, the greater its authority.Thomas Jefferson: The moneyed interest in this country is all in the north, so the wealth and power would inevitably be concentrated there in a federal government. To the expense of the south.Alexander Hamilton: If that is the case, it is unavoidable if the Union is to be preserved.Thomas Jefferson: I fear our revolution will have been in vain if a Virginia farmer is to be held in hock to a New York stock jobber, who in turn is in hock to a London banker. The opportunities for avarice and corruption would certainly prove irresistible.Alexander Hamilton: Well there you have it, as I have heard said, "If men were angels then no government would be necessary."The US debt, the sum of all outstanding obligations owed by the Federal Government, is rapidly approaching $15 trillion. Nearly two-thirds of this debt is owed to individuals, companies and foreign governments who purchased Treasury bills, notes and bonds. And here is the interesting part, the other third of the national debt is money owed by the government to itself, and is held as Government Account securities. Most of this debt is money borrowed from the Social Security Fund and other trust funds, which were running surpluses. Yes, the people of the United States are paying off a debt that they owe to themselves. I have been trying to construct a suitable means of expressing this.Lincoln, then a store clerk, is said to have walked several miles to return six pennies he had accidentally overcharged a customer. This is the kind of moral tale that shows a high understanding of the biblical wisdom towards honesty, and is a celebrated virtue. We would not celebrate however, a society that would watch a man choose between feeding his children and providing heat for them in the midst of winter, because he had to pay back money borrowed from his own savings which had been set aside for the following summer's family vacation. Nearly one-third of the total deficit is money that we owe ourselves. And, while our children are hungry, we are going broke to pay back money to an institution of our own creation that we owe only to ourselves. Who owns the $14.3 trillion dollar debt?

US government owes itself $4.6tn, that is, We The People owe ourselves 4.6tn dollars

Remaining $9.7tn owed to investors

They include banks, pension funds, individual investors, and state and local governments

Foreign governments - China: $1.16tn, Japan: $0.91tn, UK: $0.35tn

Source: US Treasury, May 2011, Congressional Research Service, Congressional Budget OfficeThere is an alternative measure of debt known as 'public debt,' which does not include money in the Social Security trust fund or other amounts that the government owes itself. Measured this way, the debt-to-GDP comparisons are much smaller. By the end of 2010, public debt is projected to be 60.3 percent of GDP, and by the end of 2012, it's projected to be 66.6 percent.

From this data, three facts become apparent, that is, there is much talk about our debt to China, but in reality we owe Japan just about as much, 1 trillion dollars each. And second, while the Federal Reserve has pumped 5.1 trillion dollars into the economy with little effect on the jobs front, why did we not pay off the debt to China and Japan which would have reduced our national debt and the interest we pay on that debt, significantly. Third, the debt the government owes itself, held in government securities, is a third of the total debt.

The question to ask all our governors and state treasurers, is how much of the state debt is money that the state owes to itself, and not the individuals, companies, and other investors who bought their notes and bonds. In a later issue I will discuss the real ticking state budget timebomb, the structural debt. The structural debt is the extent of the obligations that this and other states will still owe when everything is back to normal and people are back to work.

Combining health plans into a super plan, that is, health care insurance costs shared between members of a much bigger group, makes sense. At the same time, the insurance companies, who have a monopoly, usually do not sit back and have say 1.3 billion dollars taken from them without passing those costs on to someone else. I think we have to have a good look into the health insurance plan costs savings issue before we know how and from whom the insurance companies intend to recover this lost revenue. After all, revenue maximisation is what the CEO's of the insurance companies are there to achieve. And, as budget cutting, and not job creation is clearly at the top of the national agenda, what will the job picture look like when all the budgets are reduced to a bare minimum, and all the 'excess' employees let go. It appears that all the talk about budget cutting comes down to this, moving the money spent from one place to another. From the state personnel budget to the state welfare budget.Congress concentrates on a balanced budget, while jobs will be created when they concentrate on balanced trade.Jefferson was right, "A government big enough to give you everything you want, is big enough to take away everything you have."

Chicago Tribune, 21 April 1934with the full faith and credit of the United States at stake, deficit brinksmanship is a frontal assault on the American people